MOORLACH UPDATE — LA Times — June 2, 2012

One of the takeaways from my trip to Sacramento this week (for the CSAC Legislative Conference) was the consternation that the High Speed Rail project was causing for many of my colleagues in the Central Valley of California.  Supervisors are screaming about the farmland takings and intrusions by this public works endeavor.  The only positive I heard was that it would generate jobs.  But, it will only build a parallel track to the existing Amtrak line in this portion of the state (which is not worth taking if you live in Orange County because of the gaps requiring bus trips).  It is heartwarming to see the LA Times include Orange County in this piece, as our leaders try to suggest that the emperor has no clothes.

Bullet train faces new legal challenges

Central Valley farmers and Madera County file an environmental lawsuit, and O.C. transit officials urge the state to suspend the project.

By Dan Weikel and Ralph Vartabedian

Central Valley farm groups filed a major environmental lawsuit Friday against the California bullet train project, while Orange County transportation leaders urged state officials to shelve the $68-billion proposal until improvements can be made to the existing passenger rail system.

A preliminary injunction to block rail construction planned for later this year was requested in Sacramento County Superior Court by the Madera and Merced county farm bureaus, along with Madera County and additional plaintiffs. The project is already facing other suits, and still more agricultural interests in the Central Valley are gearing up to add to those battles.

"We think a preliminary injunction against construction will occur because there were so many violations in the authority’s environmental impact report," said Anja Raudabaugh, executive director of the Madera County Farm Bureau. The plaintiffs say that in their area, the rail project would affect 1,500 acres of prime farm land and 150 agribusinesses, including a major ethanol plant.

The unfolding legal fight will involve some of the state’s most formidable environmental law firms. Farm bureau officials hired Fitzgerald Abbott & Beardsley, while the California High-Speed Rail Authority is in the process of hiring a specialized outside law firm. Until now, the authority has relied on the attorney general for its legal defense.

"High-speed rail continues to move forward, as we do our opponents become more desperate," said Dan Richard, chairman of the authority’s board of directors.

Meanwhile, in a written critique sent to Richard, the Orange County Transportation Authority board questioned the project’s claims of profitability, its ambitious construction schedule and what officials characterized as a speculative finance plan that may never secure enough money to build even the first sections the 520-mile network.

Board members wrote that the state would be better off improving conventional passenger service and filling holes in current rail corridors before more work is done on the 200-mph system between San Francisco and Los Angeles, with an eventual spur to Anaheim.

The Orange County Transportation Authority’s directors are particularly interested in closing gaps in the existing rail system between Palmdale and Bakersfield, and Stockton and the Bay Area — a substantial inconvenience for travelers using Amtrak‘s San Joaquin service through the Central Valley.

The lack of rail connectivity in those areas forces passengers to take buses twice along the route, greatly increasing travel times. An Amtrak trip between downtown Los Angeles and Oakland now takes at least nine hours and requires a bus trip between Los Angeles and Bakersfield and between Stockton and Oakland.

Once improvements are made to conventional lines and ridership increases, Orange County board members said, it would be easier to determine if high-speed rail is economically feasible. Today, they say, there is no realistic indication that the bullet train would be well-ridden or earn an operating profit as required by state law.

"We are building something new and haven’t proven there is a pent-up demand for train travel…. I find this process almost surreal," Orange County Supervisor and transportation authority Director John Moorlach said at a recent board meeting.

The high-speed rail authority has already twice lost suits filed by Bay Area groups forcing revisions in its so-called program environmental impact report. Yet another lawsuit has been threatened over the report and if it has to alter the document a third time, it could hold up construction.

Gov. Jerry Brown and high-speed rail officials have been concerned about such litigation, which they fear will disrupt the tight schedule for completion of certain portions of the project.

Authority officials plan to start building the first 130 miles of track in the Central Valley by the end of the year. That $6-billion section, which will not be equipped to operate trains, is supposed to be finished by 2017 to avoid losing federal funds.

In March, administration officials held discussions with the Sierra Club, the Natural Resources Defense Council and the Planning and Conservation League on ways to exempt the project from state environmental laws.

Joel Reynolds, a Natural Resources Defense Council attorney, said Brown is finalizing a list of exemptions that environmental groups may be able to consider early next week. He added that the organizations would probably oppose any wholesale changes in the law.

Brown administration officials said Friday that they are not seeking any exemptions from the law.

But Rich Tolmach, executive director of the California Rail Foundation, said the governor wants to make it far more difficult for a judge to order a halt to the project until disputes are resolved in court.

Tolmach, a critic of the project, said Brown also wants to free the authority from having to assess the impact of the entire line and a requirement that environmental reports be revised when significant changes are made to projects.

In a state Senate hearing, Richard said he would seek some type of environmental relief to prevent an injunction that would halt the project.

Now that the Madera County suit has been filed, Raudabaugh said, such a move would amount to "political suicide," particularly because the state would be attempting to stop a county from a hearing on its environmental concerns.


June 1


The LA Times printed a Letter to the Editor, titled “Pool Analysis Was All Wet,” by a former Treasury Oversight Committee member appointed by Supervisor Roger Stanton.  During his time of service on this Committee, he was given the moniker “media maven” by his colleagues because he liked to garner media attention.  He postured often about financial issues, but was often loose with the facts.  He once wrote a critical letter to the editor about the Nevada County Treasurer.  Boy, did she give me an earful – something about “he can kiss my [rear end], and I have a big [rear end].”  In my case, the writer should have known that the County did compare its investment yields against institutional funds.  Regretfully, when you start with an inaccurate premise, then the whole observation is incorrect.  Very awkward.  However, the letter did provide an opportunity for the Editor of the LA Times Editorial Page, Steve Burgard, and I to do lunch and bury the hatchet over his “bum rap” editorial from the campaign in May of 1994 (see MOORLACH UPDATE — OC Register — May 22, 2009).  It also provided the printing of my rebuttal a week later (stay tuned).

            I read your May 9 article ("Everyone Back in the O.C. Pool?") with great amusement.

I strongly agree with [County CEO] Jan Mittermeier that the county does not belong in the business of managing other people’s money, as I know that there are many qualified institutions who can do as well or better than [Treasurer-Tax Collector John M.W.] Moorlach and his staff–without adding to the county’s liability concerns.

What I really found amusing, however, is that your paper would give so much credibility and emphasis to the return comparisons between the Orange County money-market pool and its "peers," especially when the source of this data was the county’s treasurer-tax collector’s office.

Being as most of these money-market funds are what are commonly known as "retail" funds, the expense ratios on these funds are typically upward to 50 basis points (one-half of 1%) or more.

Yet because the treasurer lobbied to take over control of the county pool to save the county money relative to the 5 basis points (1/20th of 1%) that Salomon Bros. was charging to manage this pool, I can only assume that the expense ratio on the county pool is currently some figure which is less than 5 basis points.

It doesn’t look to me like we are comparing apples to apples.

Therefore, I took the figures from your article and added back the expense ratios for each fund in order to "gross up" these returns.

This then allows us to compare the effective management of those people who are handling each individual fund, exclusive of their fee structure.

The revised order of your table based upon "gross" returns for the benefit of your readers then becomes Janus, Federated, Dreyfus, Provident, Orange County and Fidelity.

Should the opportunity present itself for local cities and agencies to consider the county as an investment option, I’m sure that most competent treasurers will compare the Orange County pool with "institutional" money-market funds, which typically charge an expense ratio in the 10- to 20-basis-point range.

These funds should offer a more politically comfortable alternative to these cities in addition to the potential for equal or superior investment returns.



Costa Mesa

Treasury Oversight Committee


Kelly Strodl of the Daily Pilot announced the Shellmaker Island construction conclusion in Readying for science center – Groups that will use Back Bay facility make plans for their operations.”  As the article describes one of the County’s resources, I’m providing it in full.  If you are ever at the Dunes, please look at this glorious facility.

As construction crews continue working on the Newport Bay Science Center on Shellmaker Island, the various groups that plan to use the facility shared their ideas about how the facility can best be used.

The center boasts four wings intended for administrative purposes, storage, teaching and water-quality testing.

Orange County Health Care Agency Water Quality and Public Health Laboratory staffers will be the first tenants of the new building. It is a welcomed move for the eight-person staff, which has been working out of a triple-wide portable for four years. The lab conducts about 40,000 water-quality tests every year and assists a number of county agencies.

With 3,800 square feet of space in the new water-quality lab, director Douglas Moore plans to add responsibilities.

"Our public aim is toward adult education," Moore said. "One of the things we’d like to expand is the teaching program courses for certain groups and supply Fish and Game with water-qualities materials for the courses they offer to younger students."

Moore also plans to use a teaching lab for public seminars and workshops about water-quality testing, state standards and the agency’s various research programs.

UC Irvine researchers, local teachers, Department of Fish and Game staffers, and the Newport Bay Naturalists and Friends are compiling a curriculum for students. Part of that new curriculum may include equipment for DNA analysis, Newport Beach City Councilwoman Leslie Daigle said.

Newport Beach Assistant City Manager Dave Kiff broke down how the various organizations will use each of the four wings.

"Fish and Game will utilize the storage and administrative wings, while also providing courses to the public on basic estuary ecology, and marine life concepts," Kiff wrote in an e-mail. "The Teaching Lab will include a number of touch tanks and other aquarium items used to educate grade-school students and other advanced tools for the higher grades."

However, some involved with the project still have concerns about what age groups the programs will focus on.

"The idea is to have a working lab and not a marine petting zoo, not to have the things already there, but to go out and get them from the bay and study them at the facility," said Dennis Baker, president of the Naturalists and Friends. The Peter and Mary Muth Interpretive Center on the other side of the bay already has a successful program for younger children, he added.

Baker said the new science center will focus on estuaries and tide lands, not ocean waters. "We are concerned what is happening in the bay and what in the watershed effects the bay," Baker said.

"One of our concerns is that we don’t duplicate those programs," Baker said in reference to other labs in the area such as the Ocean Institute in Dana Point and programs at the interpretive center. "Why build a big building to do the same thing?"

It’s unlikely that any programs with the schools will begin until fall 2008, Baker said.

City officials and Orange County Supervisor John Moorlach are scheduled to visit the grounds today.

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